Online Tax Bill Re-Introduced in Congress

WASHINGTON – U.S. lawmakers reintroduced a bill last week that could lead to tax collection by online retailers.

Sen. Mike Enzi (R-Wyo.) and Rep. Steve Womack (R-Ark.) introduced The Marketplace Fairness Act that authorizes state governments to require most out-of-state retailers to collect tax from consumers. Reportedly, the bill has garnered bipartisan support from more than 50 senators and representatives.

Backers say the bill will help brick-and-mortar stores be more competitive with online retailers. Currently, out-of-state stores, including online retailers, can’t be required to collect sales tax unless they have an in-state presence, such as a physical location. Consumers are supposed to self-report their online purchases and pay sales taxes, but many believe people don’t do this.

The measure is similar to a bill introduced in 2011, but this version includes an exception for small businesses with less than $1 million in sales, while the previous measure only exempted businesses that took in less than $500,000.

A host of retail organizations support the bill, including Amazon. The Direct Marketing Association (DMA), though, says that the proposal still imposes unwieldy administrative burdens on businesses.

“Our position hasn’t changed much on this,” says Jerry Cerasale, senior vice president for government affairs at the DMA. He adds that the bill could require businesses to comply with new sets of complicated tax rules, not to mention deadlines and forms, in numerous jurisdictions.

MediaPost reports that several states recently passed laws requiring Amazon and other retailers to collect sales tax if they pay commissions to in-state affiliate marketers – including Web publishers that offer links to the sites. It’s not yet known whether those measures will survive court challenges. New York State’s highest court heard arguments about the issue last week and is expected to issue a decision in the next few months.